COMPANY NEWS

COMPANY NEWS; Whitman Revamping; Will Spin Off Pet Inc.

Reuters

Published: September 29, 1990

CHICAGO, Sept. 28—
The Whitman Corporation, a troubled conglomerate, announced a long-awaited revamping today but surprised analysts by including the spinoff of its profitable food division, Pet Inc., its biggest unit.

Whitman, whose stock price has been languishing, previously said it would concentrate on foods and beverages.

The company said it would take a third-quarter charge of $150 million for the spinoff, resulting in a big loss for Whitman in the quarter and a loss for the full year. In addition to the spinoff of Pet, Whitman said it would cut costs by about $54 million through plant consolidations, reduction of overhead expenses and job cuts.

Whitman did not say exactly when it would spin off the company to its shareholders.

The Chicago-based Whitman, formerly called IC Industries, said about 1,000 of its 25,200 jobs would be cut through attrition, retirements and terminations. The company said it might move a much-reduced headquarters staff to a less expensive Chicago location.

After the spinoff, Whitman will be left with its Midas auto mufflers business, its Pepsi-Cola General Bottlers operations and its refrigeration equipment business, Hussman.

Whitman's decision to spin off Pet shocked industry analysts who expected the troubled company to build on its food operations and spin off one of its non-food units.

''This really is a surprise because this is the largest contributor to sales and earnings, and it is perhaps the one that could produce the steadiest cash contribution over the long haul,'' said Janet Mangano, an analyst at Jesup-Josephthal & Company.

Although surprised by the spinoff, analysts were not disappointed by the move. ''It wasn't what we wanted them to do, but in essence it accomplishes most of what we wanted them to do,'' said Timothy Ramey, analyst with County NatWest USA. ''This will be viewed positively.''

Whitman's stock, which has risen this week on speculation of a new restructuring move, rose 62.5 cents today, to $19.375, on the New York Stock Exchange.

Miles Marsh, currently president of Whitman, will become chairman and chief executive of Pet when it becomes a stand-alone company.